Why Health Companies Need to Know How the FDA and FTC Enforce Regenerative Medicine Industry Violations

The Food and Drug Administration (FDA) has the authority to enforce its laws and regulations against companies that manufacture and distribute healthcare products in interstate commerce.

Healthcare companies, doctors, biotechnology companies, and others need to understand when their products and treatments must be approved by the FDA. Experienced stem cell and regenerative medicine lawyers understand how to seek FDA premarket approval and what steps need to be taken to comply with the FDA regulations.

The FDA does have authority to enforce its regulatory programs. FDA normally begins by sending warning letters. If necessary, the FDA will seek to seize regenerative products such as stem cell devices, PRP devices, and other medical devices so that unapproved devices and treatments can’t be used. It can request court approval to stop a health care company or practitioner from engaging in regenerative medicine procedures. FDA may even seek criminal enforcement of its laws and regulations.

The main types of civil FDA enforcement actions are:

• An FDA warning letter. These warning letters inform companies and violations that they are in violation of specific FDA regulations. The letter informs the health provider or company that must state in writing what corrective actions they intend to take.
• FDA Seizure. If products are adulterated or misbranded, then the FDA can act to seize the products and remove them from the marketplace.
• An Injunction. The FDA can request that a court instruct a health care company or physician that they are enjoined from certain acts such as specific medical procedures.

The healthcare businesses and providers may have some rights to defend themselves such as by arguing that the product or treatment is governed by state medical boards and not by the FDA; however, FDA has a lot of enforcement discretion and tends to read its jurisdiction expansively

Criminal prosecutions of FDA violations

The FDA can recommend prosecutions for violation of the Federal Food, Drug, and Cosmetic Act. In misdemeanor cases, the government does not need to show proof of intent to violate the Act. Felonies are usually brought for multiple violations of the act or an “intent to defraud or mislead.” Misdemeanors are usually punishable up to one year. Felonies can be punishable up to three years.

The criminal fines can be quite substantial. The FDA fines for each type of offense are:

• Up to $100,000 for a misdemeanor by an individual that does not result in death.
• Up to $200,000 for a misdemeanor by a corporation that does not result in death.
• Up to $250,000 for a misdemeanor by an individual that results in death, or a felony.
• Up to $500,000 for a misdemeanor by a corporation that results in death, or a felony.

The National Center for Biotechnology Information states that:

 “Under the Food, Drug, and Cosmetic Act, advertising for treatments based on stem cells that are not approved by the FDA is a serious infraction of the law. The FDA has the option of proceeding against an entity touting stem cell usage for unapproved uses either through civil or criminal law enforcement.

Depending on the circumstances, civil actions can begin with warning letters. If the warnings are not heeded, actions can escalate to lawsuits, seizures, and other orders directly regulating the conduct of those involved.”

The FDA is not afraid to bring criminal charges too. The FDA brought criminal charges in 2012 against two people who ran companies that advertised and promoted “stem cells, dietary supplements, and vaccines to treat amyotrophic lateral sclerosis, MS, and Parkinson’s disease.” The two individuals pled guilty to the charges. In 2013, the FDA obtained a guilty plea from an assistant professor of pathology and laboratory medicine at the Medical University of South Carolina for causing the introduction of stem cells into interstate commerce without the approval of the FDA. The defendant worked at a laboratory that was authorized to do kidney cancer research. The lab was not authorized to harvest, use, or process the stem cells for other purposes. The defendant also sold stem cells to unauthorized recipients.

In both civil and criminal cases, the FDA works with field offices who conduct inspections and investigations.  FDA also collects samples.

The Federal Trade Commission (FTC) and Stem Cell Regenerative Medicine

Many health companies oversell and misrepresent what stem-cell therapy, PRP, gene therapy, and other types of regenerative medicine can do. While the Food and Drug Administration (FDA) works to protect consumers from unsafe products and treatments, The FTC works to protect consumers from false, deceptive, and misleading advertising.

The Federal Trade Commission (FTC)’s Bureau of Consumer Protections focuses on inaccurate health claims in a variety of health-related areas such as supposed cures for cancer, diabetes, obesity, alcoholism, and other disease. The FTC and the FDA often work together. This work includes improper advertising for regenerative medicine devices and treatments.

Protecting consumers and patients from advertising violations is primarily the responsibility of the FTC. Still, which agency can bring enforcement actions can get complicated – and does require the help of skilled regenerative medicine lawyers.

Both the FDA and the FTC have authority to pursue Internet marketing violations. With new technologies, like stem cell therapies and other types of regenerative medicine, the FTC tends to defer to the FDA for issues that have a scientific component. The FTC pursues violations pursuant to its Congressional authority.  Some of the laws that the FTC administers include:

• The Federal Trade Commission Act (FTCA)
• Telemarketing Sale Rule,
• Identity Theft Act
• Fair Credit Reporting Act
• Clayton Act
• More than 70 laws in total

The FDA pursues violations of the Food, Drug, and Cosmetic Act.

For the FDA, the key advertising violation question is – Did the FDA approve the therapy? Promoting an unapproved therapy or advertising the sale of the unapproved therapy is not legal.

For the FTC to act on a health claim, it needs to show that the claim is “false and deceptive.”- is there adequate scientific substantiation to support the claim? The key question is – Does the claim (promotion, advertisement) have scientific validity? The FTC can only act if the answer to the scientific validity question is yes – otherwise, it must defer to the FDA.

The FDA vs. FTC question on who has the right to enforce the laws is often determined by how strong or weak the scientific evidence to support the claim is.

FTC enforcement of unfounded stem cell therapy claims

The prior director of the FTC, David Vladeck, said that during his tenure there weren’t any actions or any complaints about stem cell therapies filed with the FTC. Vladeck said that this may be due to uncertainty about the procedural process or that patient think that complaints won’t lead anywhere. Patients may not believe they were misled.

Most websites that promote stem cell therapies have numerous disclaimers to try and prevent against US prosecution by the FTC. A few examples include the following:

• “The statements, treatments, and other information on this website have not been evaluated by the U.S. FDA,”
• “The stem cell protocols we offer are not approved in the United States as treatments, therapies, drugs, new drugs, or investigational drugs,”
• “We do not claim that our treatment protocols are approved by the U.S. FDA or proven to be effective in the United States for any condition that appears on this site or for any other condition,”
• “There could be significant and unknown risks associated with adult stem cell treatment as long-term studies have not yet been performed,” and
• “Very few randomized controlled trials of adult stem cells have been performed; therefore, no guarantee of safety or effectiveness is made or implied.”

There is no certainty that these disclaimers would work as a defense to an FTC false, deceptive, or misleading advertising claim – since most websites that promote stem cell therapies do claim, to some extent, that their therapies have some scientific grounding, with some assurance that they will work. When in doubt, consult a stem cell and regenerative medicine lawyer or law firm.

Local vs. foreign companies

The location of the biotech or other regenerative medicine company is not necessarily material.

The key factor is not where the company is based. If a regenerative medicine health company sells its product or treatments in the United States, then the FTC can regulate it. Still, the FTC may choose to work with counterpart agencies (agencies with similar roles) in the state where the company is located rather than to pursue an action in the United States.

Cooperation with a foreign country’s agency does depend on whether the activity is illegal in that country. If a healthcare company’s actions are legal in the foreign state but illegal in the United States, then the FTC will need to bring charges in the United States. Advertising over the Internet may be enough to say a foreign company acted illegally in the United States.

As a practical matter, the FTC can inform the media outlets that display the faulty advertising that they may be liable under US law – and thus may discourage them from carrying the defective ads.

Factors the FTC considers when deciding whether to conduct an enforcement action

The FTC reviews numerous complaints each year including:

• Reviewing the more than 2 million consume complaints it receives each year
• Complaint referrals from other agencies such as the FDA
• Complaints from experts, academics, and other trusted sources

David Vladeck, former director of the FTC says:

“At the FTC, our job is not to prevent people from making bad choices. It is to ensure that people do not make bad choices on the basis of bad information.”

“Websites are being constructed by very skilled marketers who are selling hope, Vladeck said. We have all seen the mythology and the lure of miracle cures. One year acai berries or green tea may be heralded as promising treatments. Currently it is stem cells that are getting such attention.”

Biotech, life science, research, and other companies need to be aware of many different laws. The FTC and the FDA only have one priority – to protect the consumer. Civil FDA actions include warning letters, injunctions, and criminal prosecutions. The FTC has its own set of enforcement actions. A key difference between an advertisement that will be regulated by the FDA versus the FTC is the scientific evidence behind the claim.

To understand which healthcare and administrative laws apply, what protective steps can be taken, and what the penalties are for noncompliance – stem cell and regenerative medicine companies and doctors need to speak with an experienced FDA and FTC lawyer.  Advertisements can’t make false promises. To learn more about the laws and regulations that apply to the practice of regenerative medicine, arrange to speak with a skilled healthcare lawyer now – one who has represented numerous healthcare companies and individuals. Call, Cohen Healthcare Law Group PC now at 310-844-3173 or complete our online contact form to schedule an appointment.